The Beauty of Bartering: A Smart Way to Start and Grow Your Business

When money’s tight, how can you grow your business? Trade for the items you need, say trading professionals and the hosts of A&E’s 2012-2014 original trading show Barter Kings. Traders Steve McHugh and Antonio Palazzola have their own approach to trading up to get what they want — on the premiere episode, the pair worked their way up in a series of six trades from a framed gold Elvis record to a powerboat.

While we might not all have the skills to trade up for more valuable items, barter is definitely a useful tool for business owners looking to stretch their budget. In this tough economy, barter has boomed, and online barter exchanges that help you find items to barter for are mushrooming.

How can entrepreneurs barter for what they want without spending a dime, even if they don’t have an item of equal value to trade? Here are seven tips from McHugh and Palazzola:

1. Don’t bring cash. Palazzola has a strict policy of leaving his wallet at home when he goes to a trade. That way, when a trader wants to “even out” a trade by having you add in a few hundred dollars in cash, you can simply say you have no cash available. It’s a straight trade or nothing.

2. Look for the soft spot. The pair chat up traders to find out why they’re selling. For instance, one trader needed to get rid of his son’s dirt bike because the boy had broken his leg, and his wife was mad. Another had made a vow to his wife not to ride motor­cycles as long as they had kids at home, so the bike had to go. When you know the trader has to ditch their item, you’re in a stronger position to negotiate and trade them a slightly less valu­able item.

3. Be stoic. Never let a trader see you’re crazy hot to get an item. Stay impassive, and act like you don’t care to make the best deal.

4. Leave some mystery. When you’re listing an item to trade, don’t advertise all the details. Post a good photo, and leave it with a basic description so the prospect has to call you to find out more.

5. Craigslist rules. Both hosts recommend the popular site as the top place to scan for trades. Not everyone posting on there will be savvy about how much their item is really worth, giving you an opening to potentially trade an item.

6. Know your item’s value. You can’t come out on top in a deal if you’re not sure what both the item you’re trading and the one you’re get­ting are really worth. Often, traders will price items with sentimental value in mind or still have the original retail price in their heads, both of which are irrelevant to the resale market. Bring an experienced trader with you, or have a smartphone handy for checking eBay to establish what this item is selling for today, in its current condition.

7. Watch out for scams. There are plenty of shady traders out there, Palazzola says. If you smell something fishy, run the other way.

A fish story
What if the product you bring to the table is wild Alaska salmon, halibut and lingcod? How do you find a web designer who’s willing to take payment in fish?

This was the issue faced by Mack Chaffin, co-owner with his wife, Diane, of The Elfish Co., a fish distributor. Although he did a decent business selling fish through his website, at farmers markets and to a handful of restaurants and grocery stores, Chaffin wanted to expand.

But marketing requires capital that the Dewey, Arizona-based businessman didn’t have. So at the end of 2011, when he discovered The Barter Group, a trade exchange of 450 small businesses in Greater Phoenix, he leapt at the chance to join. Entrepreneur cast a line to Chaffin to find out more, and the following is an excerpt from that interview.

Entrepreneur: Why join a bartering organization?

Mack Chaffin: Until now, the farmers market in Phoenix had been my primary source of revenue. I’ve been looking for ways to expand, to get the word out that we’re here. But we don’t have the kind of capital needed for advertising. Most of our capital has been used to purchase the freezers where we store our fish and other items to get the business established.